Tesla names Robyn Den­holm to re­place Musk as chair

In­com­ing head has served on Tesla’s board since 2014, but has fewer ties to CEO

The Standard (St. Catharines) - - Business - TIM HIG­GINS AND ROBB M. STE­WART

Tesla Inc. named Robyn Den­holm as its new chair­man, re­plac­ing Chief Ex­ec­u­tive Elon Musk as the head of the board with a rel­a­tive out­sider who will face the dif­fi­cult task of over­see­ing the mav­er­ick bil­lion­aire.

Ms. Den­holm, the chief fi­nan­cial of­fi­cer of Aus­tralian telecom­mu­ni­ca­tions com­pany Tel­stra Corp., has served on Tesla’s board since 2014 but has fewer ties to Mr. Musk than most of the com­pany’s di­rec­tors. The com­pa­nies said she would be leav­ing her CFO role at Tel­stra in May and un­til then re­lin­quish her role as chair of Tesla’s au­dit com­mit­tee.

The an­nounce­ment late Wed­nes­day comes ahead of a Nov. 13 dead­line that was part of Mr. Musk’s set­tle­ment with the U.S. Se­cu­ri­ties and Ex­change Com­mis­sion to end claims he mis­led in­vestors. That deal re­quired Mr. Musk to step aside as head of the board for three years in fa­vor of an in­de­pen­dent chair­man.

In­stalling Ms. Den­holm, who is 55 years old, as chair­man puts an­other leader at the top of Tesla for the first time since its ear­li­est days when Mr. Musk was named chair­man in 2004 af­ter be­com­ing the largest in­vestor. Mr. Musk, who has also held the ti­tle of chief prod­uct ar­chi­tect, has run Tesla al­most as an ex­ten­sion of him­self, spear­head­ing parts of the busi­ness as var­ied as strat­egy and mar­ket­ing, and en­gi­neer­ing while im­mers­ing him­self in the small­est of pro­duc­tion de­tails. He re­mains CEO.

The de­ci­sion thrusts into one of the bright­est spot­lights in Amer­i­can busi­ness a woman who is lit­tle known in the U.S. but has ex­ten­sive ex­pe­ri­ence as a fi­nance ex­ec­u­tive in Sil­i­con Val­ley and her na­tive Aus­tralia.

As a Tesla board mem­ber, Ms. Den­holm has pro­vided some rare au­to­mo­tive ex­pe­ri­ence to a com­pany that prides it­self on be­ing an in­dus­try out­sider. She spent seven years at Toy­ota Mo­tor

Corp. in Aus­tralia, where she was a se­nior fi­nan­cial man­ager.

Her ca­reer blos­somed in the tech in­dus­try. She held var­i­ous roles at Sun Mi­crosys­tems be­fore get­ting hired at Ju­niper Net­works Inc. in 2007. She left as chief fi­nan­cial of­fi­cer and op­er­a­tions of­fi­cer in 2016 and in 2017 joined Tel­stra, where she was ini­tially chief op­er­a­tions of­fi­cer. She be­came CFO this year.

En­thu­si­asm for Mr. Musk’s vi­sion of the fu­ture, in­clud­ing elec­tric cars that drive them­selves, has helped push Tesla’s mar­ket value to ri­val Gen­eral Mo­tors Co., even though Tesla has never turned an an­nual profit and sells a frac­tion of the cars.

Tesla’s growth has been, in large part, fu­eled by its con­tin­ued ac­cess to cap­i­tal—ei­ther through is­su­ing new shares or tak­ing on new debt. A Tesla with­out Mr. Musk would likely have a harder time rais­ing funds, an­a­lysts have said.

That cre­ates a chal­leng­ing sit­u­a­tion for the Tesla board and Ms. Den­holm. They have to man­age Mr. Musk while al­low­ing him to op­er­ate in the un­con­ven­tional way that has en­abled its suc­cess. Tesla ac­knowl­edges as much in its fil­ings with the SEC, not­ing the com­pany is “highly de­pen­dent on the ser­vices” of Mr. Musk.

The dis­pute with the SEC stemmed from Mr. Musk’s Aug. 7 tweets in which he raised the idea of tak­ing Tesla pri­vate and said he had se­cured fund­ing for a deal at $420 a share.

Shares ini­tially soared with the un­ex­pected news only to later plum­met as it be­came clear over en­su­ing days that Mr. Musk didn’t have a fi­nal­ized plan.

The SEC al­leged that Mr. Musk didn’t have fund­ing locked down and ac­cused him of pick­ing that price—a ref­er­ence to mar­i­juana—to im­press his girl­friend.

The Sept. 29 set­tle­ment with the SEC, in which Mr. Musk nei­ther ad­mit­ted nor de­nied wrong­do­ing, re­quired him and Tesla each to pay $20 mil­lion in fines. It also re­quired Tesla to add two new in­de­pen­dent board mem­bers and es­tab­lish a sys­tem to over­see Mr. Musk’s pub­lic state­ments. Tesla has un­til the end of De­cem­ber to meet those re­quire­ments. Mr. Musk was al­lowed to re­main as Tesla CEO and stay on Tesla’s board.

Mr. Musk’s tweet about go­ing pri­vate trig­gered gy­ra­tions in Tesla’s stock price and sparked a cri­sis for the board. A week af­ter­ward, it ap­pointed a spe­cial com­mit­tee to eval­u­ate a pos­si­ble deal, com­posed of Ms. Den­holm and two other di­rec­tors. The com­mit­tee hired ad­vis­ers but was dis­solved when Mr. Musk re­versed course later in Au­gust.

It is un­clear if the loss of the chair­man role will change Mr. Musk’s be­hav­ior. Mr. Musk, fa­mous for his lack of re­straint on Twit­ter, has seemed to make light of the is­sue. On Oct. 30, he tweeted that he had deleted his ti­tles and would go by “the Noth­ing of Tesla,” be­fore adding in an­other mes­sage that the com­pany was legally re­quired to have some ti­tles and sug­gested he would go by pres­i­dent.

Days later, the com­pany filed pa­per­work with the SEC that con­tin­ued to call him CEO.

That tweet was part of a se­ries of state­ments since the SEC set­tle­ment that seemed to poke fun at it with­out cross­ing a line to anger the agency into tak­ing new ac­tion. On Oct. 4, he ap­peared to mock the SEC in a tweet la­bel­ing the agency as the “Short­seller En­rich­ment Com­mis­sion,” a ref­er­ence to his feud with in­vestors who are bet­ting against Tesla.

Tesla’s board has come un­der crit­i­cism from some in­vestors and ad­vo­cates for a per­ceived lack of in­de­pen­dence be­cause most of the di­rec­tors have close busi­ness or per­sonal re­la­tion­ships with Mr. Musk. One is his brother, Kim­bal Musk.

Share­holder ad­vo­cates have chal­lenged Tesla’s board, with lit­tle suc­cess. Ear­lier this year share­hold­ers re­jected a push to vote off Kim­bal Musk, long­time in­vestor An­to­nio Gra­cias and me­dia ex­ec­u­tive James Mur­doch, who was painted as lack­ing man­u­fac­tur­ing qual­i­fi­ca­tions.

Mr. Mur­doch, the CEO of 21st Cen­tury Fox, was widely spec­u­lated to be a lead­ing can­di­date to take over the chair­man role. Mr. Musk struck down those re­ports in a tweet last month. (21st Cen­tury Fox and News

Corp, par­ent com­pany of The Wall Street Jour­nal, share com­mon own­er­ship.)

Mr. Mur­doch joined Tesla’s board last year along with Linda John­son Rice, CEO of John­son Pub­lish­ing Co., af­ter share­hold­ers in­clud­ing the Cal­i­for­nia State Teach­ers’ Re­tire­ment Sys­tem pres­sured the com­pany to add two in­de­pen­dent di­rec­tors.

Ms. Den­holm be­gan her ca­reer as an au­di­tor at Arthur An­der­sen in Aus­tralia in the 1980s be­fore join­ing Toy­ota in 1989. There, she han­dled a num­ber of fi­nan­cial­man­age­ment roles as Toy­ota be­gan adding larger and more lux­u­ri­ous ve­hi­cles to its lineup.

She then spent some two decades at Sil­i­con Val­ley tech com­pa­nies Sun Mi­crosys­tems and Ju­niper Net­works.

In re­cent years, Aus­tralia has be­come a prov­ing ground for U.S. au­to­mo­tive ex­ec­u­tives. Gen­eral Mo­tors Co.’s top prod­uct ex­ec­u­tive, Mark Reuss, ran op­er­a­tions there be­fore re­turn­ing to the U.S. for in­creased re­spon­si­bil­i­ties.

The com­bi­na­tion of lo­cal man­u­fac­tur­ing and sales op­er­a­tions gives ex­ec­u­tives unique hands-on ex­pe­ri­ence as well as ex­pe­ri­ence deal­ing with cur­rency fluc­tu­a­tions.

NEWS CORP. AUS­TRALIA

In­stalling Robyn Den­holm as chair puts an­other leader at the top of Tesla for the first time since its ear­li­est days.

KI­ICHIRO SATO THE AS­SO­CI­ATED PRESS FILE PHOTO

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